The harmless observations of Ugandan, Paul Busharizi. Is it me or are we missing something here?

Monday, March 18, 2013

LET OIL SPUR UGANDA'S KNOWLEDGE INDUSTRY

Last week Ugandan Tutus Mawano emerged on of three winners
in a continental computer applications innovation competition.

His innovation “Ffene” is a low cost business management application
aimed at helping small business owners to file better books of accounts and
monitor the business remotely.

As the demands of society increases productivity, the amount
you extract for every unit of input, has to increase too.

So if you were previously man and wife subsisting off a
piece of land, when the children come along, you have to find a way to extract
more from the piece of land to sustain all of you.

Innovation is critical to any developing and growing
society. Innovation is what will allow you to extract more and more value from
less and less of the natural resources available.

Innovation is built on knowledge. The more knowledge a
society has the more innovative it can be.

An interesting article “Ideas trump resources when it comes
to city growth” published in “The Atlantic Cities” Magazine last week extended
this same point further in a way that is relevant for Uganda.

The article was a commentary on a previous article that had
noted that, currently in the US the parts where the economy is on the rise is
the states or cities based on extractive industries like mining and oil
drilling.

“The real winners of the global economy have turned out to
be not the creative types or the data junkies, nut the material boys:
countries, states and companies that have perfected the art of physical
production in agriculture, energy and , remarkably, manufacturing, ” one David
Brooks argued in the New York Times.

However the rebuttal in Atlantic Cities argued thatits not resources but ideas that powered
advanced economic growth noting that “Large endowments of natural resources and
of extractive industries can pose a powerful barrier to knowledge accumulation,
educational excellence and advance economic development,” an apt description of
the ‘resource curse’.

A study which contrasted cities with and without extractive
industries showed that the cities with extractive industries tended to have
lower levels of entrepreneurship and lower growth in economic activity.

However they always are the exceptions to the rule,
countries or cities which have extractive industries but have shown progress in
the three key indicators of regional economic development --GDP per capita, average wages and per capita
income.

Countries such as Canada, Norway and Australia have done
well to exploit their resources for sustainable growth in sharp contrast to
Russia, Venezuela and the Middle East the article says.

They have done this by investing their windfalls on building
“institutions and social structures which harness knowledge, accumulate the
human capital, and generate the innovative capacity that powers economic
growth.”

The articles points to Houston in the US and Calgary in
Canada as examples of the cities that have exploited their natural resources
well. Houston has developed a cluster of high value added technology oil
related industries, to the point that it is the home of a large number of
technology workers and software engineers specializing in oil. Calgary has
built itself up as a knowledge and as a result is the most affluent city in
north America.

We have already earmarked our petrodollars for
infrastructure development as a first priority ploughing into social services,
research and innovation would guarantee not only sustainable development but
that more people will enjoy the benefits of this finite resource.

For starters there is no reason why Uganda cannot become the
hub of agricultural research in the region, especially since agriculture will
still be an important sector long after the oil has dried up.

They say don’t count your chicken before they hatch, but in
the case of money you need to know how you will spend before you get the
income. Otherwise thewhen our oil
dollars turn up we will be like pigs at the trough and when its all done we
will look back and wonder where it all went – Nigeria style!